10 Great Long-Term Investments for Your Portfolio

Investing is a way to grow your money and provide a stable financial future. The keys to profiting from investments include diversifying your portfolio, staying optimistic, and understanding that some investments do better over the long term. Here are 10 great long-term investments to consider.
Infographic of a man putting money into a timer for long term investments

Whether a veteran investor or a novice, you should consider long-term strategies to grow your money and safeguard your financial future by providing another source of income or growing wealth. While there are no guarantees when it comes to investing, if you begin by setting long-term investment goals and decide on the level of risk you are willing to live with, you can plan for long-term investments that pay off down the road.

Some people invest by the high-risk, high-reward mantra. They look at tech stocks and other volatile investments as their best chance of making big money fast. Those who don’t mind taking a financial hit during a downturn and are patient enough to wait for the market to rally back often reap the rewards they seek. However, any investor is wise to spread the risk around with low-risk, high-risk, and middle-of-the-road choices. Consider some great long-term investment options if you don’t mind giving your assets time to grow.

Stocks

When many people think of investing, stocks come to mind. Investing in single stocks is often risky, especially stocks from start-ups and tech companies. Investors make money on stocks when the stock price rises, allowing them to sell for a profit or through profit-sharing payments, known as dividends.

Wise investors understand that investing in a start-up, tech stocks or green stocks offered by environmentally-friendly companies that produce products and services may not pay off in the short run. However, as public confidence grows and the potential benefits or profits rise, so do stock prices.

Regardless of the stock type, investors can find it easier than ever to purchase stocks. Many investment companies offer fractional shares of stocks, putting these investment options in the hands of individuals who traditionally would not have had access to them.

Blue Chip Stocks

Investors seeking stocks with a history of growth might consider Blue Chip stocks. A Blue Chip stock has a proven track record of slow and steady growth. That is not to say Blue chip stocks cannot fall on hard times, such as when Eastman Kodak went bankrupt in 2012, which was attributed partly to the global recession of 2008-2009 and the rise of digital photography. 

Nevertheless, many investors understand that Blue Chip stocks typically outperform newcomers. They are less volatile, well-capitalized, pay dividends, and offer products or services that people need. Blue Chip stocks that are household names include Alphabet (Google), Amazon, Home Depot, McDonald’s, Starbucks, and Walmart.

Exchange Traded Funds (ETFs)

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An ETF is like buying a bag of different stocks rather than investing in a particular stock. ETFs make it easy to diversify your holdings. ETFs do not require a minimum investment, so they appeal to a broader audience and can be a means for new investors to get their feet wet. A brokerage house can help you get started with ETFs. There are several investment options within the ETF category. ETFs track an index such as the S&P 500, which tracks the stocks of the 500 largest companies listed on various U.S. exchanges. 

ETF fund managers buy stocks from among the indexes they track. However, some ETFs do not follow a specific stock index. Many ETFs contain stocks from the same industry. For example, if you purchase a banking ETF, it might consist of stocks from various banks. A global ETF consists of stocks from several countries. As with stocks, investors can purchase ETFs anytime during the trading day.

Mutual Funds

A mutual fund is a means for people to invest in different securities or diversify their holdings. Using money collected from several individuals, the mutual fund company buys various stocks, bonds, and securities and holds them in a portfolio. Individual investors own a share of the portfolio. Fund managers regulate mutual funds actively, but unlike ETFs that trade throughout the day, managers execute mutual fund trades once daily.

Traditional Individual Retirement Account (IRA)

A traditional individual retirement investment account is a vehicle for investing pre-tax income. When investing in a traditional IRA, there are no taxes on capital gains or dividends until someone withdraws the funds. An individual must have earned income to fund an IRA, and there is a limit on the amount they can place in the IRA annually. When owners withdraw money from a traditional IRA, they pay taxes at their current income tax rate.

Roth IRA

People who want to fund an IRA with after-tax dollars can choose the Roth Individual Retirement Account option. The difference between a Roth and Traditional IRA is that the owner has already paid taxes on the money deposited in the Roth IRA. For those who think their marginal taxes will increase in the future, a Roth IRA is an excellent financial choice; however, income limits determine who can contribute to a Roth IRA. Since those limits change, it is best to talk with a financial advisor about eligibility.

Real Estate Investing

Several options exist for investing in real estate. One way is to buy and rent a property. Buying, remodeling, and flipping property is another option, but that is typically a short-term activity. Real estate investment trusts are options for investing in real estate without the headache of owning properties, including finding tenants or buyers. Anyone can invest in a REIT the same way they invest in stocks or securities, including through 401K plans and IRAs.

Certificates of Deposit

While it works differently than investment products, like stocks, a Certificate of Deposit or CD is often a safe way to save and grow money because it earns interest over time. Banks and credit unions typically offer CDs. 

To open a CD, an individual deposits money into an account and agrees to keep it there for a set amount of time. Interest rates and conditions vary with financial institutions, so shopping around for the best offer is best.

Bonds

Investing in a bond means loaning money to an entity that will pay interest during the bond term. When the bond matures, the borrower pays the total amount of the bond back to the investor or lender. Two primary types of bonds are government bonds and corporate bonds. Usually, the longer the bond is held, the higher the interest rate paid.

Cryptocurrency

Cryptocurrency is a money system that allows peer-to-peer financial transactions without a central bank or intermediary. No entity can change the value or track transactions. Cryptocurrency functions entirely online through an electronic ledger called a blockchain. There is no physical currency. Cryptocurrency users engage in transactions by using keys stored in a virtual wallet. Cryptocurrency is currently considered a volatile investment. It is best to do careful research and manage risk by diversifying cryptocurrency holdings.

These ten long-term investments can help individuals build a solid financial future, but patience is required. With careful investing strategies, there are often excellent rewards for long-term investors. It is best to seek professional advice and diversify to safeguard investments and savings.

You might also be interested in: States Not Taxing Retirement Income As Of 2022

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